Brocket's Ag Advice
IM By John E. Brockett
jH Farm Management Agent
Lewistown Extension Office
How tax laws affect farms
A while back an attorney wrote a
real good article in the “Hoard’s
Dairymen” on tax laws that work
against the bonafide farmer. While
reading the article, the first
reaction is that he was wrong.
After all, what is wrong with
someone buying cows to get in
vestment credit and possible
capital gains upon their resale? As
a matter of fact, the letters that
were written to the magazine
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opposed his ideas. Let’s explore
the thing in a little more depth.
One letter said that it was good
for him to have people buy his
embryo transplant heifers because
it helped his income, thus it was
good for all agriculture. The letter
writer’s shortsightedness did not
recognize that this milk from those
heifers was going to compete with
his own milk in a limited market.
Thus in the long run he may
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actually lose more from reduced
milk prices than he gained from
the sale of a few heifers. What
about the large number of farmers
who do not have transplant heifers
for sale?
No, I am not saying farmers
should sell animals to non
farmers. I am saying that, perhaps
we, as farmers, should see if there
are not ways that we could prevent
farming from being a tax shelter.
Parts of the proposed tax law
address this question, but these are
the parts that will be least likely to
survive. Reason; both farming
groups and effected investors
oppose the change. I guess that
most farmers are reconciled to
allow non-farmer investors to run
agriculture in the future.
Here are the laws that encourage
outside investors;
• Investment Credit for farm
assets.
• Safe Harbor leasing.
• Capital Gains for dairy and
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Do these also help farmers?
they do, but is the tax help worth
the loss of income because of
competition in the market place
with people who can and even
desire to sell at a loss (it too is
deductible)?
The answer is not an easy one
because in the past some of the
innovations and technical changes
ur farming have been brought by
interested non-farmers who had a
desire to do some farming.
Perhaps we should start with one
point at a time.
I would suggest starting with the
loss area first. Why not limit the
amount of loss that a non-farmer
could take against other income to
either a percentage of that*income
or a set figure?
Which tax laws work against
farm families directly? One is the
law that forces a person to charge
an interest rate that is higher than
wme other sources or than the
bank will pay on borrowed money
over $lOO,OOO. Why is that
necessary? Another one is the law
that requires that a family sell the
farm to a child at market price.
Why not allow the farm to be sold
at agricultural value the same way
it can be inherited?
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Lancaster Farming Saturday, June 15,1985-D5
Keoughs (HR10)
Did you know that if you have a
Keough Account you will have to
file a return this year? Well you
will. My suggestion is to ask the
- company who sold you the plan to
help you fill it out. They will
probably have to provide you with
part of the information anyway.
The deadline date is the end of
July. I’ll have more on this later
when it comes closer to the
deadline.
It may be possible to roll over
your Keough into an IRA. That
would not eliminate the Keough
tax return for this year, but would
for the future. Check with your
company-if they say no, then
check with someone else.
referendum
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July 19 to 26. All known producers
who had a wheat allotment m 1977
will receive a ballot. Any wheat
grower who had an allotment in
1977 and does not receive a ballot,
should contact their local ASCS
office. Ballots will be mailed July
15th.
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